A credit score is a 3-digit summary of credit worthiness. It says how likely you are to repay debt. Is credit score all there is to get a loan? Credit score is an important factor to get loan sanctioned, but it’s not the only factor. Lenders look at your profile, years of service, educational background, dependents, assets, income and savings before sanctioning the loan.
The credit score ranges from 300 to 900 with 300 being the lowest score and 900 the highest. A credit score of 750+ helps get loans sanctioned.
SEE ALSO: Eligibility Criteria For Credit Card
Missing the due date on your credit card or not paying EMIs in time is a strict No. This gives a bad credit score. Missing a single EMI impacts the credit score.
A track record of timely payments (You pay EMIs and credit card bills on time), impacts credit score. Credit history is assigned a weightage of 35% in credit score.
Many people have this question? Does paying electricity bill or water bill late affect credit scores? Fortunately No…. It’s just the loans and credit card bills which must be paid in time.
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Unsecured loans like personal loan, credit cards have no collateral. Lenders charge a higher interest on these loans. This is why credit mix is very important. Credit mix refers to the type of accounts which make up your credit information report (CIR). If you have availed a number of unsecured loans, credit score goes down.
Time: If there are no changes/updates in credit information report, this causes fluctuations in credit score. Missing a single EMI over a long period of repayments has not much effect on credit score. This doesn’t mean you must miss even a single repayment.
Payment history: This has a high weightage in credit score. Paying EMIs and credit card bills influences credit score as payment history is reported to credit information bureaus like TransUnion CIBIL, Equifax, Experian and Highmark.
Debt-to-credit ratio: This tells how much available credit you’re using. How does this influence credit score? If your credit card balance changes each month and the amount of available credit you are using changes, credit score fluctuates.
Can medical debt impact credit score?
No, unpaid medical bills does not impact credit score.
Does checking my Credit Score Hurt My Credit?
When you check your credit report and credit score, it’s a soft enquiry. This doesn’t hurt credit score. IndianMoney has tied-up with Experian to give free credit score. Check credit report and credit score FREE at IndianMoney.com
Credit cards fix credit limit based on earning potential, financial position and credit history. Credit limit is the maximum outstanding balance on credit card. Credit limit doesn’t remain same across life and you can enhance it as you earn more.
1. Use credit cards when travelling abroad
Credit card Companies charge an overseas currency markup which could go up to 3.5% for transactions overseas. This is prime income for credit card Companies. If you frequently travel abroad, credit card Companies enhance credit limit.
2. Apply for a new credit card
Just apply for a new credit card with higher limit. You could apply at the same lender or a new one. Banks check credit score before sanctioning the credit card.
3. Request credit limit hike
Increase credit limit by requesting a hike. The credit limit depends on current income and credit score.
4. Opt for secured credit card
Pledging a fixed deposit can increase credit limit. Axis Insta Easy Credit Cards, ICICI Instant Platinum Card, SBI Credit Cards, HDFC Credit Cards and IndusInd Credit Cards are some of the secured credit cards in India.
5. Use credit card regularly
Using credit card regularly with timely repayments sends a signal to banks that you’re a candidate for enhanced credit limits.
6. Submit salary increment slips
Earning potential increases credit limit. If you have got a salary hike, submit documents and enjoy a higher credit limit.
If you have a credit card with a history of timely repayments over a long period, don’t close it. This helps build a good credit score. Closing a credit card is done only once all dues are paid. It has no impact on credit score.
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